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Whatever You Do, Hang on to Your Engineers

Whatever You Do, Hang on to Your Engineers

Orders are up and business is improving for the electronics industry as we collectively begin to recover from what has been described as one of the worst recessions to ever hit our industry. One of the most impacted segments of the high-tech world was the semiconductor industry, and Xilinx was no exception.

At the worst point of the downturn, our company experienced an over 50% reduction in revenues, making cost cutting a critical component to our survival. As a fabless company, we were better poised to meet that challenge.

Xilinx is a company with an employee base made up of highly educated, motivated, and talented individuals-many of them engineers. We knew it was the right business decision to hold on to our employees-even during these slower times. So despite a hiring surge during the prior "boom," we considered a layoff as a last resort. At a company such as ours, a great deal of our IP and know-how is really in the heads of our people. When they walk out the door, a lot of that valuable knowledge is gone. And studies have proven that companies who emphasize job security have a higher return to shareholders over time. In short, companies that hold on to their employees perform better in the stock market.

Because our industry is cyclical we knew that business would indeed pick up again. If we were to let people go, we would have to either rehire these people or find new people. We knew if we made it through the downturn without a layoff, we would be in a stronger position once the economy improved. At Xilinx, we consider every person an investment.

Our plan therefore was simple: Stay the course and continue to develop and deliver leading edge products, while cutting costs wherever possible.

When the downturn took place, we were extremely upfront with our employees. We told them the dilemma and financial bind we were in as a company and solicited their feedback, advice, and support.

Through our collective efforts, we instituted a variety of cost cutting measures that quickly added up. We cancelled sales conferences, reduced travel expenses by 50%, and cut overall energy consumption by an amazing 24%. The most significant savings resulted from a company-wide strategy to reduce payroll expenses. Through temporary, tiered pay cuts and several holiday shutdowns, we managed to save over ten million dollars per quarter on payroll expenses alone. The CEO and executive staff took the largest cut at 20%, followed by directors at 10%, mid-level management at 6%, and non-management salaried employees at 3%. Hourly employees had no cut in pay.

I'm happy to report that our strategy paid off. We delivered five new products in 18 months and gained market share. The shutdowns and salary cuts are behind us, and employee morale continues to be very high as evidenced by our Number Four ranking in Fortune magazine's "100 Best Companies to Work For."

What did the downturn teach us? It taught us to think creatively and reminded us of our core values. I can honestly say that morale remained high during the tough times.

Most importantly, we learned that the best way to gain market share is to hang on to our engineers.

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